'Courage' in Washington Doesn't Have the Same Meaning

08/20/2012 04:58 pm ET
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Updated
Oct 20, 2012

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Dean Baker
Co-director, CEPR; author, "Rigged: How Globalization and the Rules of Modern Economy Were Structured to Make the Rich Richer"

Last week Vice President Joe Biden did a courageous thing, he promised an audience in southern Virginia that there will be no cuts whatsoever to Social Security in a second Obama Administration. He used the strongest possible language, telling customers at a local diner: "I guarantee you, flat guarantee you, there will be no changes in Social Security. I flat guarantee you."

That was good to hear from the vice president. Since the Obama Administration had several times indicated that it would be willing to cut Social Security as part of a "Grand Bargain" on the budget, it was encouraging to hear Mr. Biden make such an unambiguous commitment. While nothing in politics can be taken as 100 percent certain, this is about as good as you get.

On the one hand, Biden's commitment may not seem very courageous. After all, he is running for office and Social Security is the most popular program on the table. It draws approval ratings close to 80 percent from Republicans, conservatives and even Tea Party supporters. Backing Social Security in this context might just seem like cheap politics, which it may well be.

However, Biden also lives in a city where calling for cuts to Social Security is the way to demonstrate your manhood. The bigger the cuts and the more frequent the calls, the higher your status. And, there are plenty of rewards for those politicians who go down fighting for Social Security cuts. Just check out the salaries for the lobbying jobs of the Blue Dog Democrats who have left office in recent years.

The Washington Post immediately got on the job of applying the peer group pressure to Mr. Biden, running an editorial denouncing his lack of "courage." The editorial repeated the usual points -- the trust fund will go broke in just 21 years. Of course this means that we would only be able to pay 80 percent of scheduled benefits rather than 100 percent, if Congress did nothing.

And the amount needed to pay full scheduled benefits is considerably less than the annual cost of the war with Iraq. Did we need more than two decades to figure out where the money is going to come from to pay for that war? To put it another way, if the shortfall was made up entirely through higher payroll taxes, the increase would be a bit more than 5 percent of projected wage growth over the next three decades. Are you terrified yet?

Actually, the best part of the editorial was when the Post gave its preferred fixes to the projected Social Security shortfall. One of the items it listed was "tweak the inflation calculator," which it assured us could be done "with no harm to the safety net."

Hey, who could object to tweaking the inflation calculator if that would save Social Security? In case you missed it, "tweaking the inflation calculator" means reducing the annual cost-of-living adjustment by 0.3 percent. That might seem small, but it adds up over time. After 10 years retirees will see a 3 percent decline in benefits, after 20 years the reduction is 6 percent, and those who live to collect benefits for 30 years would see roughly a 9 percent drop in benefits. This isn't doing harm to the safety net?

The amazing part of the story is that the Post did not have the courage to tell readers that it is proposing a cut in benefits. Instead this editorial on courage used a euphemism whose meaning would likely not be apparent to many of its readers.

We could all just laugh at the incompetence and hypocrisy of the Washington Post editorial board, but this is important. Social Security accounts for more than half of the income for two-thirds of retirees and more than 90 percent of the income for one-third. The average check is just over $1,200 a month, so we are not talking about people living the good life, but for tens of millions of people Social Security is what makes their retirement possible.

It's also important to remember that retirees and near-retirees are so heavily dependent on Social Security because of the incredible incompetence of the folks running economic policy over the last 15 years. If the highly paid people who design economic policy knew what they were doing, so many seniors wouldn't have seen savings in the stock market vanish or their home equity disappear. Nor would so many near-retirees have experienced years of unemployment or underemployment.

In this amazing city, the people who want to take a hatchet to the Social Security and Medicare benefits that tens of millions of ordinary workers will need in retirement are considered courageous. The people who want to tax Wall Street speculation, who want to crack down on multi-billion dollar abuses by the pharmaceutical industry, and who want to go after CEOs who rip off their companies for tens of millions of dollars a year -- well, they're just crazy. After all, no one gets paid big bucks for going after people with money.